responding application record of the respondent ...€¦ · court file no.: cv-19-616261-00cl ....

Court File No.: CV-19-616261-00CL

ONTARIO SUPERIOR COURT OF JUSTICE

(COMMERCIAL LIST)

IN THE MATTER OF SECTION 60 OF THE TRUSTEE ACT, R.S.O. 1990, C. T. 23, AS AMENDED, AND RULE 10 OF THE ONTARIO RULES OF CIVIL PROCEDURE,

R.R.O. 1990, REG. 194, AS AMENDED

AND IN THE MATTER OF HI-RISE CAPITAL LTD. AND IN THE MATTER OF ADELAIDE STREET LOFTS INC.

RESPONDING APPLICATION RECORD OF THE RESPONDENT, SUPERINTENDENT OF FINANCIAL SERVICES

March 28, 2019 Thornton Grout Finnigan LLP TD West Tower, Toronto-Dominion Centre 100 Wellington Street West, Suite 3200 Toronto, ON M5K 1K7 Fax: (416) 304-1313

John L. Finnigan (LSO# 24040L) Tel: (416) 304-0558 Fax: (416) 304-1313 Email: [email protected]

Lawyers for the Respondent, Superintendent of Financial Services

- 2 -

TO: THIS HONOURABLE COURT AND TO: THE APPLICANT, HI-RISE CAPITAL LTD. c/o Cassels Brock & Blackwell LLP

Barristers and Solicitors 2100 Scotia Plaza 40 King Street West Toronto, ON M5H 3C2 Fax: (416) 640-3057 John N. Birch (LSO #38968U) Tel: (416) 860-5225 Email: [email protected] Stephanie Voudouris (LSO #65752M) Tel: (416) 860-6617 Email: [email protected] Lawyers for the Applicant, Hi-Rise Capital Ltd.

AND TO: THE RESPONDENT, ADELAIDE INVESTORS c/o MILLER THOMSON LLP

Suite 5800, 40 King Street West Scotia Plaza Toronto, ON M5H 3S1 Jeffrey Carhart (LSO #23645M) Tel: (416) 595-8615 Fax: (416) 595-8695 Email: [email protected] Gregory Azeff (LSO #45324C) Tel: (416) 595-2660 Fax: (416) 595-8695 Email: [email protected] Stephanie De Caria (LSO #68055L) Tel: (416) 595-2652 Fax: (416) 595-8695 Email: [email protected] Representative Counsel for Adelaide Investors

- 3 -

AND TO: ADELAIDE STREET LOFTS INC. c/o MCCARTHY TÉTRAULT LLP

Suite 5300, 66 Wellington Street West TD Bank Tower Toronto, ON M5K 1E6 Geoff R. Hall (LSO #34701O) Tel: (416) 601-7856 Fax: (416) 868-0673 Email: [email protected] Junior Sirivar Tel: (416) 601-7750 Email: [email protected]

AND TO: JASDEEP BAL and DANIEL PERLIN Guardian Legal Consultants LLP

133 Richmond Street West, Suite 200 Toronto Ontario M5H 2L3 Jasdeep Bal Tel: (647) 983-3309 Fax: (647) 499-4307 Email: [email protected] Daniel Perlin Tel: (647) 983-3310 Fax: (647) 499-4307 Email: [email protected] Counsel to Investors

- 4 -

INDEX

TAB DOCUMENT

1. Affidavit of Janet Nairne, sworn March 28, 2019

A. Exhibit “A” – Appendices to Exhibit H to the Affidavit of Noor Al-Awqati’s sworn March 19, 2019

B. Exhibit “B” – Appendices to Exhibit I to the Affidavit of Noor Al-Awqati’s sworn March 19, 2019

Court File No. CV-19-616261-00CL

ONTARIO SUPERIOR COURT OF JUSTICE

COMMERCIAL LIST

IN THE MATTER OF SECTION 60 OF THE TRUSTEE ACT, R.S.O. 1990, C. T. 23, AS AMENDED, AND RULE 10 OF THE ONTARIO RULES OF CIVIL PROCEDURE,

R.R.O. 1990, REG. 194, AS AMENDED

AND IN THE MATTER OF HI-RISE CAPITAL LTD. AND IN THE MATTER OF ADELAIDE STREET LOFTS INC.

AFFIDAVIT OF JANET NAIRNE (Sworn March 28, 2019)

I, JANET NAIRNE, of the City of Mississauga, Regional Municipality of Peel, in the

Province of Ontario, MAKE OATH AND SAY/AFFIRM:

1. I am a legal assistant at Thornton Grout Finnigan LLP (“TGF”), counsel for the

Respondent, Superintendent of Financial Services, and as such I have knowledge of the facts

hereinafter deposed to.

2. On March 25 2019, John Finnigan, counsel to Superintendent of Financial Service at

TGF, requested from the applicant’s counsel, Cassels, Brock & Blackwell LLP (“CBB”), copies

of the appendices to Exhibit H and I to the affidavit of Noor Al-Awqati’s affidavit, sworn on

March 19, 2019.

EXHIBIT “A”

APPENDIX D Adelaide Lofts

ASSET HOLDER SECURITY DOCUMENTS

APPENDIX “D”

Section 3 Part E. Form 1 – Investor/Lender Disclosure Statement for Brokered Transaction list documents that may or may not be related to this investment. Enclosed in Appendix “D” are documents related to Part E. of Form 1

1) Copy of The Mortgage Charge

2a) Appraisal/Opinion of Value on the Property and/or Project

2b) Not applicable

3) Not applicable

4a) Adelaide Street Lofts Inc. Business Credit Report

4b) Not applicable

5) Not applicable

6) Mortgage Participation Agreement & Loan Participation Agreement

7) Form 1.1 Investor/Lender Disclosure Statement

In addition to the standard Investment Documents Hi-Rise Capital has enclosed the following documents as part of its disclosure to investors for review.

8) RSA Errors and Omissions Insurance Liability Policy

9) Certification of Incorporation

Narrative Appraisal263 Adelaide Street West

Toronto, OntarioApril 2015

PREPARED BY:Matthew Bruchkowsky, AACI, P. App.

Senior DirectorValuation & Advisory Services

PREPARED FOR:John NeilasNeilas Inc.

One Queen Street EastSuite 2200Toronto, Ontario M5C 2Z2www.colliers.com

Phone: 416.777-2200Fax: 416.643.3470

File Reference: TOR-15-286

(TOR-15-286)

April 20, 2015

Neilas Inc.

263 Adelaide Street West, Suite 503

Toronto, Ontario M5 H 1Y2

Attention: John Neilas

Dear Mr. Neilas:

RE: FULL NARRATIVE APPRAISAL OF DEVELOPMENT SITE LOCATED AT 263 ADELAIDE STREET

WEST, TORONTO, ONTARIO

In accordance with your request, we have inspected the property described above and have carried out a

Narrative Appraisal in order to estimate the current market value of the Subject, as at the effective date of the

valuation.

Based on our analysis, the market value of the Subject property, subject to the Extraordinary Assumptions on

page 3, and the Contingent and Limiting Conditions listed in Appendix A, and as at April 15, 2015, is estimated to

be;

FORTY ONE MILLION DOLLARS

$41,000,000

The value estimates are based on an exposure time of one to three months, which is assumed to precede the

valuation date. This report describes the methods and approaches to value in support of the final conclusion

and contains the pertinent data gathered in our investigation of the market.

Yours very truly,

COLLIERS INTERNATIONAL REALTY ADVISORS INC.

Matthew Bruchkowsky, AACI, P. App.

Senior Director

Valuation & Advisory Services, Toronto

263 Adelaide Street West, Toronto, Ontario


Table of ContentsExecutive Summary ........................................................................ i

Terms of Reference ........................................................................ 1

Property Data................................................................................. 4Municipal Address ..................................................................................................................................4

Legal Description....................................................................................................................................4

Ownership and History...........................................................................................................................4

Site Description ......................................................................................................................................5

Land Use/Planning .................................................................................................................................6

Location Description...............................................................................................................................9

Market Overview........................................................................... 12March 2015 Canadian Economic Overview......................................................................................... 12

March 2015 Ontario Economic Overview............................................................................................ 16

March 2015 Toronto Economic Overview ........................................................................................... 19

Residential Condominium Sub-Market Overview ................................................................................22

Valuation ...................................................................................... 25Highest and Best Use...........................................................................................................................25

Direct Comparison Approach...............................................................................................................29

Appendices................................................................................... 39Appendix A Contingent and Limiting Conditions

Appendix B Definitions

Appendix C Comparable Sales

Appendix D Certification


File Reference: TOR-15-286 i

Executive Summary

263 ADELAIDE STREET WEST

TORONTO, ONTARIO

Date of Appraisal April 15, 2015

Property Type Current Use – Mixed use heritage building

Proposed Use – Mixed-use Development

Rights Appraised Fee Simple Interest

Purpose and Function The purpose is to estimate the current market value of the Subject as

a redevelopment site.

The function of the report is to estimate the market value of the

property for internal purposes.

Registered Owner Adelaide Street Lofts Inc.

Legal Description PT BLK B PL 216E TORONTO AS IN ES61538; S/T & T/W ES61538;

CITY OF TORONTO

Assessment Roll Number 1904062280002000000

PIN Numbers 21411-0162

Property Description

The Subject consists of a rectangular shaped site with frontage on the south side of Adelaide Street West, just

east of John Street in Downtown Toronto. At the date of inspection, the Subject was improved with heritage

listed mixed use building.

Site Area 0.35 acres or 15,430 square feet (Source: Client)

Frontage Approximately 129 feet on the south side of Adelaide Street West

Configuration Rectangular

Services Full municipal services available.

Land Use Controls

Official Plan Toronto Official Plan, as amended, designates the property as a

Regeneration Area.


File Reference: TOR-15-286 ii

The Subject falls within the King-Spadina North Secondary Plan.

Land Use Classification The zoning by-law designates the Subject as being RA, which permits

residential and commercial uses. The site requires rezoning to permit

the proposed development.

Compliance As presently configured and used, the proposed development

requires a rezoning application to permit the proposed density and

height.

Highest and Best Use Development of the existing land uses for high density mixed use in

compliance with the prevailing land use controls.

Direct Comparison Approach

Site Area 15,430 square feet or 0.35 acres

Proposed Gross Floor Area 409,774 square feet (Client)

Estimated Land Value 409,774 square feet x $100/sq. ft. buildable = $41,000,000

Final Value Conclusion

Effective Date April 15, 2015

Value Estimate $41,000,000

Exposure Time One to three months


File Reference: TOR-15-286 iii

Regional Map

Location Map


File Reference: TOR-15-286 iv

Photographs of Subject Property

VIEW OF THE SUBJECT PROPERTY VIEW OF THE SUBJECT PROPERTY

VIEW EAST ALONG ADELAIDE STREET WEST VIEW WEST ALONG ADELAIDE STREET WEST


File Reference: TOR-15-286 1

Terms of ReferencePurpose and Function of Report

The purpose is to estimate the Subject’s current market value as a redevelopment site. The function is for

internal purposes. John Neilas of Neilas Inc. has requested this report. This report has been prepared only for

the party named above and only the specific use stated.

Property RightsThe property rights appraised are those of Fee Simple Interest.

Effective DateThe effective date of this valuation is April 15, 2015.

Inspection DateMatthew Bruchkowsky, AACI conducted an exterior inspection of the Subject property on April 15, 2015.

Market Value DefinitionFor the purposes of this valuation, market value is defined as:

"The most probable price which a property should bring in a competitive and open market under all

conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and

assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a

sale as of the specific date and the passing of title from seller to buyer under conditions whereby:

1. Buyer and seller are typically motivated;

2. Both parties are well informed or well advised, and acting in what they consider to be in

their best interests;

3. A reasonable time is allowed for exposure in the open market;

4. Payment is made in terms of cash in Canadian Dollars or in financial arrangements

comparable thereto; and

5. The price represents the normal consideration for the property sold unaffected by

special or creative financing or sales concessions granted by anyone associated with the

sale.”

(Source: The Appraisal Institute of Canada "Canadian Uniform Standards of Professional Appraisal Practice". 2012.



Exposure TimeAn estimate of market value is related to the concept of reasonable exposure time. Exposure time is the

property's estimated marketing time prior to a hypothetical sale at market value on the effective date of the

appraisal. Reasonable exposure time is a necessary element of a market value definition but is not a prediction

of a specific date of sale.

Exposure time is also a product of the function of the real property in question. The Subject is a downtown

redevelopment site that is proposed for development with a high density mixed-use building. The downtown

market is easily accessed from the Subject via public transit operated by the TTC and there are significant

amenities in the area available to prospective residents.

Ongoing discussions with agents active within the real estate market have indicated that properties such as the

Subject typically require a marketing period of one to three months, depending on a number of factors including

location, condition and motivation of the purchaser/vendor. Therefore, it is concluded that for the Subject

property to sell at the market value estimated herein as of the effective date of this report, an exposure period

of approximately one to three months would be required.

Scope of the ValuationThis is a Narrative Appraisal Report and complies with the reporting requirements set forth under the

Canadian Uniform Standards of the Appraisal Institute of Canada. As such, all relevant material is provided in

this report including the discussion of appropriate data, reasoning, and analyses that were used in the appraisal

process to develop the appraiser’s opinion of value. Additional supporting documentation concerning the data,

reasoning, and analyses are retained in the appraiser’s file. The depth of discussion contained in this report is

specific to the needs of the client and for the intended use stated herein.

Market information reviewed is available from publicly available sources including economic reports, Statistics

Canada, the municipal economic development office, etc.

Market information was obtained from Colliers Research, commercially available information databases

(RealNet, Geowarehouse and Marsh Report) and local real estate professionals knowledgeable about the local

market.

During the course of preparing this valuation, the following was completed:

An inspection of the property and the surrounding area.

A review of available data regarding the local market.



Verification of current land use and zoning regulations via discussions with the City of Toronto planning

department.

Review of the proposed development material provided by Neilas Inc.

A review of sales and listing data on comparable properties.

An examination of market conditions and analysis of their potential effects on the property.

A review of the local competitive market.

Interviews with market participants.

An analysis of the highest and best use of the property.

Contingent and Limiting ConditionsThis report is subject to the Contingent and Limiting Conditions set forth within the Addenda to this appraisal in

addition to any specific assumptions that may be stated in the body of the report. These conditions are critical to

the value stated herein and should be thoroughly read and understood before any reliance on this report

is considered.

Extraordinary AssumptionsAn Extraordinary Assumption is an assumption, which if not true, could alter the appraiser’s opinions and

conclusions. They are required when a Hypothetical Condition is necessary due to circumstances that are not

self-evident regarding the appraised property. Hypothetical Conditions include retrospective appraisals,

significant renovations to the improvements, completion of proposed improvements, etc.

It is an Extraordinary Assumption of this report that the Subject can be rezoned to permit a 409,774 square feet

development.

Extraordinary Limiting ConditionsAn Extraordinary Limiting Condition refers to a necessary modification or exclusion of an Appraisal Institute

Standard Rule. Such special circumstances include the inability to complete a property inspection, the

purposeful exclusion of a relevant valuation technique, etc.

No Extraordinary Limiting Conditions were invoked within this report.



Property DataMunicipal Address


Legal Description

PT BLK B PL 216E TORONTO AS IN ES61538; S/T & T/W ES61538; CITY OF TORONTO

Ownership and History

Current OwnershipThe Subject last transferred on June 24, 2011 for a consideration of $16,500,000 in what is believed to be an

arm’s length transaction. The property is currently registered to Adelaide Street Lofts Inc.

Current ContractsAs of the effective date, the Subject site is not the object of an agreement of purchase and sale.

EncumbrancesWe are not aware of any easements or rights of way that adversely affect the market value of the Subject

property. For greater certainty a legal opinion should be solicited for a full explanation of the effects of these

encumbrances. Additionally, the property has been valued as if it were free and clear of any financing.

Assessment and Realty Tax DataRoll No. 1904062280002000000

2015 Phased-In Assessment $17,452,000

Total per SF of land $1,131

It is reasonably expected that upon development the Subject will be reassessed and taxed accordingly.



Site Description

Area 0.35 acres or 15,340 square feet (Source: Client)

Frontage Approximately 129 feet onto the south side of Adelaide Street West.


Topography The site appears to be at grade with the surrounding properties.

Services Full municipal services available at street frontage.

Access The Subject is accessed via Adelaide Street West.

Title Instruments For the purposes of this analysis, the instruments registered against the

title(s) to the property are assumed not to have a significant effect on the

property’s marketability or its market value. For greater certainty a legal

opinion should be solicited for a full explanation of the effects of any

existing encumbrances.

For the purposes of this analysis, we assume the title is marketable

without any encumbrances.

Soil Conditions We have not undertaken a detailed soil analysis, and as we are not

qualified to comment on soil conditions, we have assumed that there are

no contaminants affecting the site. However, a full environmental

assessment would be required for certainty and any cost of remedy should

be deducted from the reported value herein. The sub-soil is assumed to

be similar to other lands in the area and suitable in drainage qualities and

load bearing capacity to support future development.

Conclusion The Subject is well located within an area of Toronto that has experienced

a significant increase in density over the last few years. The surrounding

land uses have transitioned from low density commercial uses to high

density residential and mixed uses. In addition, the Subject is in downtown

Toronto with its associated amenities, which are easily accessed via bus

and streetcar service, operated by the TTC.



Site Survey



Land Use/Planning

Official Plan Map

Regeneration Areas are key to the Plan’s growth strategy, reintegrating areas of the City that are no longer in

productive urban use due to shifts in the local or global economies. In Regeneration Areas, commercial,

residential, live/work, institutional and light industrial uses can be mixed within the same block or even the

same building.” The intent being to rejuvenate under used areas.

The Subject falls within the King-Spadina Secondary Plan. Key objectives of the secondary plan include:

- Attract new investment to the area

- Provide a mixture of uses which are compatible with the area and can evolve along a similar timeline

as the residential population stabilizes

- Retention and promotion of current commercial and industrial uses which provide for area employment

- Provide commercial activity which supports existing and new residents as well as surrounding

communities

- Retention, restoration, and reuse of heritage buildings

Permitted uses will include a mix of employment and residential, provided that employment uses are restricted

to those compatible with adjacent and neighbouring residential uses in terms of emissions, odour, noise and

generation of traffic.

Zoning

The Subject property is designated as RA under By-law 438-86. Under the current zoning a wide array of uses

including residential, office, retail, and employment uses. The zoning designation does not limit density,

however, it does restrict high to 30 meters.

SUBJECT



A rezoning application had been submitted to the City of Toronto to permit numerous aspects of the proposed

development which do not conform to the in place zoning by-law, most notably its proposed height.

Zoning Map

Heritage

The Subject is currently improved with a five storey build which is listed on the City of Toronto’s Inventory of

Heritage Buildings. The redevelopment proposal would incorporate the street facing façade of the building into

the new development.

Application

A rezoning application was which proposed the redevelopment of the Subject with a 49 storey mixed use

building with a gross floor area of 409,774 square feet. In addition, the new development would be required to

make considerations for the replacement of the rental stock currently in place.

Compliance

Under the current land use controls, the proposed development as described herein would require a rezoning

application. The current application is being review by the City of Toronto Planning Department.



Location Description

The Subject is located in an area which is transitioning from medium commercial and office uses to high

density residential and mixed uses. The Subject’s area of Toronto is known as the Entertainment District, which

has in recent years due to the significant level of development had a large population increase. The Financial

District, just east of the Subject, is readily accessible via public transit in the form of bus and streetcars

operating along Adelaide Street West. The immediate area has seen significant levels of redevelopment in

recent years, both along major arterials and immediately adjacent streets.

Recent development in the area has largely taken the form of high-density residential and mixed-use

developments, which have primarily been located along major arterials, however, due to the rising cost of

redevelopment sites, development has started to move to neighboring streets. The immediate area has in

recent years has been transformed with numerous high density mixed use developments. Currently in close

proximity of the Subject, there are 7 developments proposed for development including a 48 storey

development immediately adjacent to the Subject on the corner of Adelaide Street and John Street.

Surrounding land uses include:

North: The north side of Adelaide Street is lined by low rise commercial

buildings including a City of Toronto fire station. Further north, the

SUBJECT



area is primarily developed with low to mid rise commercial buildings interspersed

with new high density residential and mixed use developments.

South: South of the Subject to Front Street is a mixture of office and commercial buildings

of varying densities. South of Front Street is the entertainment node containing the

Rogers Center and the CN Tower.

East: East of the Subject, Adelaide Street is lined by a number of former industrial builds

which have been repurposed for commercial, office, or residential use. Many of these

buildings, which have heritage status, are the target of redevelopment proposals.

West: Immediately west of the Subject is a development site which is proposed for

development featuring a 48 storey residential tower with ground floor retail space.

Further west, Adelaide Street is lined by medium density commercial buildings and

sites proposed for redevelopment with residential or mixed use towers.

SummaryThe Subject is located in an area which is transitioning from predominantly medium density commercial uses to

high density residential uses with some commercial uses. Despite the significant supply, the demand for

residential condominiums has been stable in response to the rising cost of commuting, traffic congestion and

the high cost of single family dwellings. The outlook for this segment of the market is discussed in greater detail

within the report.



Development DescriptionThe Subject site is proposed for development with a 49-storey mixed use building containing ground floor

commercial/retail space and office space in addition to residential amenity space. The total proposed Gross Floor

Area is 409,774 square feet and would feature bachelor, one bedroom, two bedroom, and three bedroom units.

The street facing façade of the current improvements will be incorporated into the base of the new development.

Parking will consist of both vehicle and bicycle parking contained within an underground parking structure.

Development Rendering



Market OverviewMarch 2015 Canadian Economic OverviewAs a result of the decline in oil prices, the Bank of Canada became the first central bank in the larger Group of

Seven to cut interest rates lowering its target for the overnight rate by one-quarter of one percentage point to ¾

% in the first quarter of 2015. In addition, total CPI is beginning to reflect the change in oil prices and inflation has

remained close to 2.0% in recent quarters. With growing angst about the sluggish pace of job creation, a second

cut was a potential reality this month but the Bank of Canada held the rate steady at 0.75%. Canada’s streak of

unimpressive economic growth is expected to continue into 2015, with forecasts calling for 1.9% overall in 2015,

a substantial downgrade from the September forecast. While the U.S. economy is gaining momentum, the drop in

oil prices will cost producers more than US$40 billion in lost revenue and result in a considerable decline in

business investment.

Average Annual Compound Growth Rate

Economic Indicator

Historical2012-2014

Current PeriodForecast 2015

Mid-TermForecast

2016-2019

ForecastTrend

GDP 2.2% 1.9% 2.1%

Employment 1.0% 1.0% 1.4%

Unemployment(improvement)

2.8% 1.4% 4.8%

Personal Income percapita

2.6% 2.8% 2.9%

Population 0.7% 1.1% 1.1%

Retail Sales per capita 2.7% 1.6% 2.6%

CPI 1.4% 1.2% 2.0%

Housing Starts -6.1% -9.3% 4.7%

Forecast RiskThe most glaring risk to Canada’s economic outlook stems from the recent decline in the price of oil and other

commodities. While the most immediate impact will be positive- a boost to consumers’ disposable incomes and

spending, heightened manufacturing based on reducing production costs and increases in forestry and agriculture

– lower oil prices if persistent, will discourage investment and exploration in the oil sector. Lower oil prices are

typically accompanied by a weaker Canadian dollar, which we are already seeing. Over time, higher-cost oil is

still likely to be needed to satisfy growing global demand; however, prices could potentially continue to decrease,

or simply remain low through the first two quarters of 2015 before those medium-term forces really start to

influence the market which could slow growth projections even further.



Real Gross Domestic Product (GDP)

The economy is forecast to expand by just 1.9% in 2015, the fourth

consecutive year of growth below 2.5%. The sharp drop in oil prices will

cost more than US$40 billion in revenue; however, what should help

balance this is the U.S. economy’s momentum which should further

stimulate demand for Canadian exports, especially non-energy related

exports, made more competitive by the lower value of the Canadian dollar.

Employment

With overall economic growth in 2015 expected to be a substantial

downgrade from the September forecast, job growth is expected to

remain fairly tepid. After a dismal gain of 136,000 jobs in 2014, the labour

market is expected to add just 187,000 jobs in 2015.

Unemployment

Business investment will be the weakest part of the Canadian economy in

2015. Capital budgets are already being significantly cut across the oil and

gas industry. With the potential for layoffs very present and a soft

domestic economy, the unemployment rate will remain stuck at

approximately 6.8% this year.

Personal Income per Capita

Canadians have received consecutive real wage gains since 2011

averaging 2.9% per annum. Personal income per capita is anticipated to

exceed $42,500 in 2015. By 2019, personal income per capita is forecast

to exceed $47,750 with growth averaging 2.9% from 2016 through 2019.



Population

Canada’s population growth rate has been averaging 0.7% from 2012 to

2014. The country’s population is expected to grow 1.1% in 2015 to 35.8

million. The country’s population growth is forecasted to remain

consistent with 1.1% increases from 2016 through 2019 reaching over

37.5 million by 2019.

Retail Sales per Capita

Consumer spending will be restrained by soft employment growth,

including the threat of job losses in oil-rich provinces, weak wage gains,

and high levels of household debt and easing real estate markets. While

consumers should get a break on lower gasoline costs and consumer

prices, it won’t be enough to counter the trend of easing growth in

household spending.

Consumer Price Index

Canada’s Consumer Price Index is projected to finish 2015 at 1.2% with

future growth forecasted at 2.1% from 2016 through 2019. This is not

surprising given that CPI has begun to reflect the decline in the price of

oil.

Housing Starts

Residential construction investment is also expected to cool this year. A

combination of declining oil prices and oversupply in some cities’

condominium markets will prompt a 9.3% decline in new home

construction, as housing starts fall from 189,400 units in 2014 to 171,700

units in 2015.

The information is sourced from:

a) The Conference Board of Canada, Metropolitan Outlook 1 Winter 2015, based on August 29, 2014 Canadian economic accounts

b) Statistics Canada



Bond Yields

In the near term, government bond yields will remain low however as evidence that the economy is coping with

the oil price shock materializes, rates will begin to move up more aggressively according to the RBC Economic

and Financial Market Update.

So far in 2015, oil prices and bond yields have continued to fall, and many central banks have enacted further

monetary stimulus to stave off the risk of deflation. For Canada, the Bank of Canada’s 25 basis point rate cut

takes the cake as the biggest economic surprise of 2015. TD Economics February Update indicates that shorter

maturity bonds have been adjusted after the Bank of Canada announced they are foregoing a second cut in

March, indicating they are content with the way Canada’s economy is responding to the surprise cut earlier this

year.

The information is sourced from:a) Bank of Canada, Government of Canada benchmark bond yields 10 year Last updated March 9, 2015b) RBC Economics, Economic and Financial Market Outlook, February 2015c) TD Economics, Quarterly Economic Forecast, February 2015



March 2015 Ontario Economic OverviewOntario’s economy took a step toward achieving a more convincing pace of expansion in 2014. Ontario isexpected to take another step in that direction in 2015, placing it on top of the provincial growth rankings.Stronger exports, higher household spending, and brisk activity in the housing sector have re-invigorated theprovincial economy since the spring of 2014, after real GDP growth slowed to a post-recession low of 1.2 % in2013. It is believed that the recent turnaround in Ontario’s exports is just the beginning of a powerful export-ledpush that will contribute to the fastest growth in five years for the province.


Economic Indicator

Historical2012 - 2014


Mid-TermForecast

2016-2019

ForecastTrend

GDP1.5% 2.6% 2.1%

Employment1.1% 1.4% 1.6%


2.6% 2.7% -6.1%

Personal Income per capita2.2% 3.0% 2.9%

Population0.7% 0.9% 1.2%

Housing Starts-11.8% 0.8% 12.0%

Retail Sales per capita2.2% 2.8% 2.4%

CPI1.7% 2.0% 2.1%

Forecast RiskA further depreciation of the Canadian dollar could help Ontario’s competitiveness and further boost foreigndemand.



Real Gross Domestic Product (GDP)Ontario’s real GDP grew by 1.8% in 2014, buoyed by strong demand from

a resurging U.S. economy and the resiliency of Ontario consumers. This

year, economic growth is expected to accelerate to 2.6% as business

investment finally ends its two-year slump and posts solid growth. From

2016 to 2019, Ontario’s economy is forecast to grow by an average of

2.1% (compared to 2.2% for Canada), this will be driven by growth in

exports and an improving job market.

Employment

Job creation is expected to pick up its pace in the province in 2015. A

1.4% growth is forecast this year, up from a five-year low of 0.7% in

2014. In January, employment stagnated with an addition of 1,300 jobs

recorded. The market will need to show more vitality for a longer period

to change the current picture. From 2016 to 2019, employment in Ontario

is forecast to grow by an average of 1.6%.

Unemployment

The unemployment rate in the province is forecast to be at 7.2% in 2015,

after a 7.4% recorded at the end of 2014. Moreover it is expected to

decrease below 6.4% for the next few years.


Growth in employment will help increase Ontario’s personal income per

capita by 3.0% this year, bringing it to $42,000. Stronger exports, the

recent depreciation of the Canadian dollar, and continued government

support should contribute to personal income per capita growth in 2015.

Personal income per capita is expected to increase by 3.0% next year

and by 2.9% in average until 2019.



Population

Ontario’s population has been stable at around 1.0% growth since 2011

and has been lagging behind the national average. This year, population

growth should decrease slightly to 0.9%, similar to 2014. However, from

2016 to 2019, Ontario’s population growth is projected to average 1.2%

annually exceeding the national average population growth rate of 1.1%.

By the end of 2019. Ontario’s population is projected to be over 14 million.


2015’s retail sales per capita are projected to increase by 2.8%. The

province’s retail sales per capita are forecasted to continue to grow at an

average rate of 2.5% from 2016 through 2019. Improving job prospects

and lower gasoline prices resulting from the significant drop in oil prices

should offer favourable conditions for further growth in household

spending in the province, although there is room for only minimal

acceleration in retail sales from an already-brisk pace of 3.2% in 2014.


Following CPI growth of 2.5% recorded last year in 2014, the province’s

CPI is expected to slow by 2.0% which is still higher than the national CPI

of 1.2%. However both CPI’s are expected to continue on their growth

trajectory from 2016 to 2019 averaging 2.1% annually.

Housing Starts

Ontario’s housing starts are expected to increase by 0.8%, which is an

improvement from the 2.3% decline recorded in 2014. Following

surprisingly solid activity in 2014, Ontario’s housing market is forecast to

remain vibrant in 2015, with home resales being sustained near historical

highs. A slight increase in housing starts from 59,700 units in 2014 to

60,200 units in 2015 is projected.

The information is sourced from:a) The Conference Board of Canada, Metropolitan Outlook 1 Winter 2015, based on December 23, 2014 Canadian economic accounts.b) Statistics Canada.



March 2015 Toronto Economic OverviewEconomic growth in Toronto slowed in 2014. However, the manufacturing sector will continue to recover,benefitting from a lower Canadian dollar and a stronger U.S. economy. Oil prices should stay close to currentlevels in the months to come, as an ongoing global surplus will keep upside pressure on crude inventories.Moreover, the Bank of Canada lowered its key rate by 25 basis points in January, deeming the action wasnecessary given the decrease in oil prices. Overall, Toronto’s economy is expected to expand by 2.8% in 2015.An improving manufacturing sector and a healthy services sector will contribute to this growth. Output in theconstruction sector is forecast to dip slightly this year, as several nonresidential projects wrap up. Fortunately,rising housing starts will provide a boost to construction output next year, helping lift overall economic growthto 2.9% in 2016.

Average Annual Compound Growth Rates

Economic Indicator Historical2012 - 2014


Mid-Term Forecast2016-2019

ForecastTrend

GDP 2.1% 2.8% 2.7%


Unemployment (improvement) 3.6% 2.5% 5.7%

Personal Income per capita 2.5% 2.2% 3.1%


Housing Starts -19.9% 4.2% 8.6%

Retail Sales per Capita 2.1% 2.3% 2.3%

CPI 1.9% 2.0% 2.1%

Forecast RiskA lower-than-expected Canadian dollar could boost exports even more this year, leading to stronger growth inthe manufacturing sector.



Real Gross Domestic Product (GDP)Real gross domestic product in Toronto advanced by 2.4% in 2014, with

growth boosted by healthy gains in manufacturing, transportation and

warehousing, and wholesale and retail trade. Construction output is

expected to be weaker again this year, while public administration output

and the manufacturing sector are expected to post modest gains.

Fortunately, the manufacturing sector is forecast to expand at a faster

rate this year, while the remaining sectors are projected to enjoy

widespread growth. As a result, Toronto’s economy is forecast to

increase by 2.8% in 2015, the strongest gain in five years, and by a

similar pace in 2016, up by 2.9%.

Employmentn

Employment rose by 3.8% in 2013, the largest annual increase since

2000. Employment growth slowed sharply to 0.3% last year, but is

expected to improve to 1.8% for 2015. As a result, consumers are

expected to keep spending this year.

Unemployment

Toronto’s improving economic conditions are projected to reduce the

unemployment rate to 7.8% by the end of this year. But overall the

employment growth is slower. A relative lack of employment gains were

identified in the retail and wholesale trade, transportation and

warehousing, manufacturing and government services industries. On the

contrary, financial-insurance-real-estate, professional-scientific-technical,

education, health and food services are industries that are contributing to

employment gains.


Toronto’s per capita personal income is expected to grow by 2.2% in

2015. Healthy employment growth should help personal income. By the

end of 2019, the city’s per capita personal income is projected to reach

over $50,000, up from the $44,700 expected this year.



Population

Population growth in Toronto is forecast to stagnate at 1.7% this year.

Although immigration levels will remain high and the largest source of

growth comes from the non-permanent resident category which is more

volatile and therefore less predictable. A larger net outflow of population

to other regions in the province by a growing portion of retirees is also

expected.


Toronto’s per capita retail sales are forecast to slow slightly to 2.3%

(compared to 3.8% in 2014) because of slower employment growth.

Moreover, the retail industry continues to adapt to more American chains

coming to Canada, expanding e-commerce, and the rise of discount

retailers.


Toronto’s CPI and the province’s CPI growth are forecast to both slow to

2.0% in 2015 from 2.6% and 2.5%, respectively. Both CPI’s are expected

to continue on their growth trajectory from 2015 to 2018 averaging 2.1%

annually.

Housing Starts

Toronto housing starts dropped more than 35% over the past two years,

after increasing sharply from 2010 to 2012, when the market was driven

by the recovering economy, solid population growth, low interest rates,

and a trend toward condominiums. However, this year housing starts are

expected to increase by 4.2%.

The information is sourced from:a) The Conference Board of Canada, Metropolitan Outlook 1 Winter 2015, based on December 23, 2014 Canadian economic accountsb) Statistics Canada



Residential Condominium Sub-Market OverviewThe following section comprises excerpts from Urbanation’s Q4, 2014 condominium market report published on

a quarterly basis.

Toronto Condominium Market

The Toronto new condominium apartment market completed a full comeback in 2014 after a brief pause in

activity in 2013. Sales rebounded by 51% in 2014 from a 10-year low to reach 21,605 in the GTA (20,736 units

in the CMA) — the highest volume since the market peak in 2011 and the third best year on record. The 5,510

units sold in the fourth quarter were up 25% year-over-year. Price growth improved throughout the year, with

sold index prices rising 3.6% year-over-year in Q4 to $560 psf. Competitively priced new launches and hefty

incentives at existing sites helped cut total unsold inventory by 10% to end the year at 17,972 units, elevating the

share of total units in active development that are pre-sold to a near high of 83%.

The Toronto CMA saw 5,156 new condominium unit sales in Q4-2014, a seasonal increase of 20% from Q4-

2013. The average sold index price for new condominium apartments in the Toronto CMA in Q4-2014 was

$562 psf, an increase of 1.0% over Q3-2014 and 3.7% annually. The average resale index price in the Toronto

CMA rose 3.8% compared to a year ago to $434 psf and 1.2% from the third quarter. The average unit size

traded increased to 902 sf, up from 892 sf in the third quarter. Urbanation is currently tracking 285,212 units of

future condominium supply in the Toronto CMA, up from 271,033 in Q4-2013 and 278,260 in Q3-2014.

The largest development expected to launch in the first quarter is the Easton’s Group’ The Rosedale on Bloor at

387 Bloor Street East at Selby Street. The 49 and 12-storey towers will encompass 582 units in the East Bloor

/ Village submarket. The first phase of Freed Development’s Art Shoppe Condos with 693 units is expected to

be one of two new developments to launch in the North Midtown submarket in the first quarter, the other being

Pemberton Group’s Citylights on Broadway, the 34-storey north tower of a two building project at Broadway

and Redpath Avenues. On the border of the Downtown West and Annex submarkets, Shiu Pong is launching a

boutique 116-unit building at 231 College Street at Huron, the 17-storey Design Haus.

Toronto looks set to be very well supplied over the next year with existing and new condominium stock,

however, demand is continuing to grow both in volume and price per square foot. Continuing low mortgage

lending rates, high cost of single family dwellings and large amenity base in Toronto, the market for

condominiums in Toronto is anticipated to remain strong in the short to medium term.



Greater Toronto Area Condominium Market

Prices to Hold Steady with No Oversupply in 2015

Ultimately, investor involvement in the market should stay in keeping with the standard set over the past couple

years. Gone are the speculators expecting to earn a hefty profit within a few years as market appreciation has

declined. New condo prices averaged 3% growth in 2014, ending the year up 3.6% from a year earlier, while

resale prices have averaged approximately 4% during the year. It appears that for the first time in 10 years,

new and resale condo price growth is aligning and settling below 5% (Figure 1.6). The high level of overall

absorption in the new condo market and balanced sales-to-listings ratio for resale supports current price

trends.

There is a limited chance that prices will decline in 2015. Despite a high of 20,809 units finished construction in

2014, the resale listings emanating from these buildings will continue to have a negligible bearing on overall

market conditions. As a share of total resale listings, newly registered units represented an average of 10%

from 2012-2014. Even if that share rises a few percentage points, it will translate into only an extra 3% or so

more listings on the market.



Subdued Launch Activity to Keep Market Balanced

A total of 18,375 units were launched in 2014, and Urbanation anticipates a slightly lower 16,500 launches for

2015. Activity should pick up a bit in the 905 after a substantial 14% reduction in inventory last year, while

Toronto will be held back somewhat by fewer available and suitable sites to bring to market. As shown in

Figure 1.10, there is a direct negative correlation between the supply/demand balance in the market and the

number of launches. As market conditions soften (i.e. months of supply rises), launches pull back, and vice-

versa to varying degrees. Note that the paths of these two variables converge every few years as market

adjustments are made, with 2015 expected to see the next equilibrium point.

Urbanation tracked a total of 435 high-rise condominium apartment projects in the Greater Toronto Area in Q4-

2014, including 404 active projects (CMA: 386) containing 104,589 units (CMA: 102,908) and 7,246 units in 31

sold out (and not registered) projects. Urbanation tracked a total of 271,101 resale units in 1,571 condominium

apartment buildings in the Greater Toronto Area in Q4-2014. Sixteen new projects registered with a combined

3,484 units in the third quarter.



ValuationHighest and Best UseFundamental to the concept of value is the principle of highest and best use which is defined as that use which

would most likely produce the greatest net return to the land over a given period of time, bearing in mind that

the reference to net return is not limited to monetary advantage but may be in the form of amenities.

The four essential tests of highest and best use are:

Legally permissible;

Physically possible;

Financially feasible; and

Maximally productive (market demand).

A full land use feasibility study was not performed. The highest and best use conclusion is based on the

instructions of the client to value the Subject as an unimproved parcel of residential use development land.

Highest and Best UsePlease note we have not performed a highest and best use analysis as we have been requested to value the

subject site as though unimproved.

Legal Permissibility Within the zoning by-law, the Subject property is classified as RA. It is an

assumption of this report that the Subject can be rezoned to permit the

proposed development.

Physical Possibility The site is of a size/configuration that would accommodate the

construction of a high-rise residential use development. While a soil

analysis has not been conducted, nor are we qualified to comment on any

complete soil studies, analysis of the surrounding land uses indicate that

the Subject could adequately support development.

Financial Feasibility Of the permitted uses, residential or mixed-use development would be

feasible and marketable, based on the Subject’s location and site area. The

transition of the surrounding area indicates a high-demand for dwellings in

this area.

Maximum Productivity We have been requested to value the Subject as a redevelopment site and

have therefore not determined the maximum productivity of the Subject.



ConclusionAs Vacant

The highest and best use, as vacant, is for redevelopment of the Subject for residential or mixed-use purposes.

As Improved

As of the effective date of this report, the Subject is improved with a five storey heritage listed building,

however, we have been requested to value the site as a redevelopment site. As such, it is assumed that the

Highest and Best Use As-Improved is for redevelopment of the Subject for residential or mixed-use purposes.



Valuation Methodology

Traditionally, there are three accepted methods of valuing real property:

Cost Approach


Income Approach

The selection of a relevant methodology depends upon the nature and characteristics of the real estate under

consideration.

1) The Cost Approach to value is based upon the economic principle of substitution, which holds that the

value of a property should not be more than the amount by which one can obtain, by purchase of a site and

construction of a building without undue delay, a property of equal desirability and utility.

2) The Direct Comparison Approach examines the cost of acquiring equally desirable and valuable substitute

properties, indicated by transactions of comparable properties, within the market area. The characteristics

of the sale properties are compared to the subject property on the basis of time and such features as

location, size and quality of improvements, design features and income generating potential of the property.

3) The Income Approach recognizes that for many market participants, the primary purchase criteria is the

property's ability to generate income. In this approach, the potential income the property is capable of

generating is analyzed and then converted into an expression of market value by the application of an

appropriate technique. There are two main Income Approaches used by market participants.

The Income Approach via Overall Income Capitalization method is based solely upon the conversion of

current earnings directly into an expression of market value in much the same way that stocks are valued

through the use of a price-to-earnings multiplier. In this method, the net operating income for the

forthcoming year is capitalized by an overall capitalization rate which represents a typical investor’s

expectations as witnessed in the sales and listings of similar properties.

The Income Approach via Discounted Cash Flow Analysis involves forecasting the future earnings for a

prescribed time period and then discounting these annual amounts and the reversionary value of the asset

to arrive at an expression of current market value. This technique is predicated upon a number of

assumptions with respect to lease renewals and inflation, etc., and thus is considered somewhat less

objective than the traditional Overall Income Capitalization method.



Selection of Relevant Methodology (Development Site)The highest and best use of the property is as a site for a residential or mixed use high rise development.

The Direct Comparison Approach is the most common technique used to value development sites and is the

preferred method when sales of comparable properties are available.

We have analyzed sale activity in close proximity to the subject and have concluded the following:

Prudent purchasers examine potential properties on the maximum per square foot buildable area

rather than a price per square foot of site area.

Limited recent transactions exist in the market for determining an estimated value based on a price per

square foot buildable.

The cost or income approaches have not been employed because the property is assumed to be vacant land.

The valuation methodology employed in this report was limited to the Direct Comparison Approach.




The Direct Comparison Approach is based on the Principle of Substitution which maintains that a prudent

purchaser would not pay more for a property than the cost to purchase a suitable alternative property which

exhibits similar physical characteristics, tenancy, location, etc. Within this approach, the property being valued

is compared to properties that have sold recently or are currently listed and are considered to be relatively

similar to the subject property. Typically, a unit of comparison (i.e. sale price per square foot, sale price per

acre) is used to facilitate the analysis. In the case of properties similar to the subject, the sale price per square

foot of permitted gross floor area (“psf buildable”) is the most commonly used unit of comparison.

The overall site area of the Subject property is approximately 15,430 square feet (0.35 acres). The highest and

best use of the property is deemed to be a site for high density residential or mixed use development.

Selection of Comparable Sales

As one sale is not necessarily indicative of market value, an appraiser examines a number of market

transactions. When properly reconciled, trends emerge, leading to the estimate of market value of the property

being appraised.

A search of comparable land sales in the City of Toronto, with the potential for residential development, yielded

five sales considered similar to the Subject. The sale prices ranged from $7,500,000 to $78,800,017. The

sales ranged in size from 0.11 to 0.96 acres. When converted to a buildable rate per square foot, the prices

ranged from $78 to $117.



Sales of Development LandsThe chart identifies the sales we researched. In valuing the Subject property, we focused on sales most similar to

the Subject in terms of neighbourhood location, potential development, timing and density. A detailed analysis of

each of the key sales outlining our adjustments and reasoning follows.

The basis for comparison included the consideration of the following:

Sale Date;

Property Rights Conveyed;

Financing Terms;

Conditions of Sale;

Location;

Development Timeline.

Analysis

Sale Date Where the market is changing, it may be necessary to adjust prices to reflect

the time difference between the date of sale of a comparable property and the

date of valuation.

Property Rights Conveyed When real property rights are sold, they may be the sole subject of the

contract or the contract may include other rights. In the sales comparison

analysis, it is pertinent that the property rights of the comparable sale be

similar to the property rights of the subject property. All the sales considered

were fee simple transfers, no adjustments were necessary.

Financing Terms The transaction price of one property may differ from that of a similar

property due to different financing arrangements. Financing arrangements

may include existing mortgages at favourable interest rates or paying cash to

a lender so that a mortgage with a below-market interest rate could be

offered. While selected comparable sales had VTBs in their transactions, the

terms of the mortgage were considered in making adjustments to the sale

price.

Conditions of Sale Adjustments for conditions of sale usually reflect the motivations of the

purchaser and vendor. In some cases the conditions of sale significantly

affect transaction prices. Sales that reflect unusual situations, require an

appropriate adjustment for motivation or sale condition. For example, power-

of-sale conditions involve a certain degree of urgency on part of the lender -



leading to a somewhat lower sale price than what would otherwise be

expected. All the sales considered were normal market transactions with no

undue motivation, no adjustments were necessary.

Location An adjustment for location within a market area may be required when the

locational characteristics of a comparable property are different from those of

the subject property. Although no location is inherently desirable or

undesirable, the market recognizes that one location is better than, similar to,

or worse than another.

Development Timeline An adjustment for the anticipated time to development may be required when

the site requires demolition, rezoning, and site plan approval. The time

required to prepare the site for development may affect the sale price (a

longer development timeline requires a downward adjustment). Development

timeline adjustments were made when necessary.

The Appraisal Institute of Canada recommends the use of "paired sales analysis" in the derivation of

adjustments. This involves locating two very similar sales that sell in a similar time period. If the two sales

differ in only one key feature, then the difference in sale price can be used as the "market indicator" for the

adjustment for that feature. In practice, this concept usually only applies to newer homes in a subdivision.

Commercial and industrial properties tend to be more unique and therefore, it is not usually possible to find

paired sales to derive adjustments. In the absence of paired sales, it is the appraisers' experience and judgment

(based on observation), which is used for adjustments. A table of the relative adjustments is presented on

pages following a descriptive analysis of each of the key sales. Details of the comparable sales are included in

the Appendix.



ComparablesLand Transactions & Analysis

Subject

Address263 AdelaideStreet

W est

TransactionDate -----

TransactionStatus -----

TransactionPrice -----

Land Use/Zoning RegenerationArea/RA

SiteArea(Acres) 0.35Acres

SquareFootBuildable 409,774 SF

Density 27.16 X

ValuePerSquareFootBuildable -----

PropertyRightsConveyed FeeSimple FeeSimple None FeeSimple None FeeSimple None FeeSimple None FeeSimple None

Financing ----- Assumed M arket None Cash None Cash None Cash None Cash None

ConditionsofSale ----- Arm'sLength None Arm'sLength None Arm'sLength None Arm'sLength None Arm'sLength None

M arketConditions(Time) 15-Apr-15 918 days Upward 90 days None 64 days None 184 days Upward 294 days Upward

Location Good VeryGood VeryGood Good Good Good

Access VeryGood VeryGood VeryGood VeryGood Good Good

PhysicalCharacterisitics

SiteConfiguration Good VeryGood Downward Good None VeryGood Downward Good None Good None

Improvements Improved Improved None Improved None Improved None Improved None Improved None

DevelopmentCharacteristics

Timing ofDevelopment ApplicationSubmittedApplication

SubmittedNone

Application

SubmittedNone No Application Upward

Application

SubmittedNone

Application

SubmittedNone

DevelopmentSize 409,774 724,148 SF Upward 64,357SF Downward 470,000 SF None 248,380 SF Downward 200,220 SF Downward

M otivation None PurchaserM otivation Downward None None None None None None PurchaserM otivation Downward

Superior D ow nw ard Superior D ow nw ard Sim ilar N one Inferior U pw ard Inferior U pw ard

Transaction Two Transaction Three Transaction Four Transaction Five

15-Jan-15 10-Feb-15 03-Nov-14 31-Jul-14

367-369 King StreetW est 19 DuncanStreet 40 W ellesleyStreetEast 53-65Ontario Street

$7,500,000 $47,050,000 $19,270,000 $16,915,000

Closed Closed Closed Closed

RegenerationArea/RA RegenerationArea/CRE M ixed UseArea/R3 Z2.5 RegenerationArea/CRE

$117/BSF $100/BSF $78/BSF $84/BSF

A dj.

64,357SF 470,000 SF 248,380 SF 200,220 SF

O verallC om parability & A djust.

Transaction & O ther A djustm ents D escription A dj. D escription D escription A dj. D escription A dj.

Downward None Upward Upward

Conclusion Lower Than Similar To Higher Than Higher Than$117/BSF $100/BSF $78/BSF $84/BSF

0.11Acres 0.59 Acres 0.33 Acres 0.71Acres

13.68 X 18.35X 17.12 X 6.44 X17.39 X

$109/BSF

D escription A dj.

Downward

Lower Than$109/BSF

Transaction One

BlueJaysW ay

07-Aug-14

Closed

$78,800,017

RegenerationArea/RA

0.96 Acres

724,148 SF



Comparable Map



Index 1 – Blue Jays Way, Toronto: This index pertains to a land assembly situated on the southeast corner of

King Street West and Blue Jays Ways. This index registered sold on August 7, 2014, for a total consideration of

$78,800,017 representing a buildable rate per square foot of $109. The site was improved with an office

building.

A Site Plan Application (No. 13 128023 STE 20 SA) was submitted on March 4, 2013 pertaining to the land in

this transaction and adjacent parcels. The Application proposed the development of two mixed use towers of 44

and 48 storeys containing 1,035 units, which includes 122 proposed hotel units in the north tower podium. The

development would have a total gross floor area of 724,148 square feet, including approximately 9,042 square

feet of retail space, and would incorporate non-profit office space, a pedestrian pathway, museum, and hotel in

135,282 square feet of commercial space. The development would have 443 parking spaces.

The development proposed for this index of 724,148 square feet is larger to the Subject development of

409,774, requiring an upward adjustment as smaller projects typically attract a higher unit rate per square foot.

At the time of sale, the property was similar in terms of improvements, thus requiring no adjustment for

demolition costs.

This Index is considered to be situated in a superior location to the Subject given frontage onto the desirable

retail corridor of King Street west. In this regard, a downward adjustment has been applied. This index is

configured in a superior fashion to the Subject. In this regard, a downward adjustment has been applied. This

index was the object of a development application, which is felt to be similar to the Subject, requiring no

adjustment.

The index registered sold on August 7, 2014, since which time it is felt the residential development market has

improved, requiring an upward adjustment. Finally, a downward adjustment is required to account for the

purchaser’s extra motivation to complete the property assembly. Overall, it is felt that the Subject would

reasonably command a unit rate below the $109 per square foot of GFA, as indicated by this index.

Index 2 – 367-369 King Street West, Toronto: This index pertains to the sale of a high-density residential

development site situated on the south side of King Street west, east of Spadina Avenue. This index registered

sold on January 15, 2015, for a total consideration of $7,500,000 representing a buildable rate per square foot

of $117. The property was improved with a two storey retail building.

A Rezoning Application (No. 12 272708 STE 20 OZ) and A Site Plan Application (No. 12 272712 STE 20 SA)

were submitted on November 2, 2012 pertaining to the land in this transaction. The Applications proposed the

development of a 15 storey, 62 unit residential condominium development with retail at

grade. The development would have a total gross floor area of approximately 64,357 square



feet, including approximately 10,170 square feet of retail space and would have 0 parking

spaces and 69 bicycle spaces.

The development proposed for this index of 64,357 square feet is smaller to the Subject development of

409,774, requiring a downward adjustment as smaller projects typically attract a higher unit rate per square

foot. At the time of sale, the property was similar in terms of improvements, thus requiring no adjustment for

demolition costs.



configured in a similar fashion to the Subject. In this regard, no adjustment has been applied. This index was

the object of a development application, which is felt to be similar to the Subject, requiring no adjustment.

The index registered sold on January 15, 2015, since which time it is felt the residential development market

has remained stable, requiring no adjustment. Overall, it is felt that the Subject would reasonably command a

unit rate below the $117 per square foot of GFA, as indicated by this index.

Index 3 – 19 Duncan Street, Toronto: This index pertains to the sale of a high-density residential development

site located on the south side of Adelaide Street West, just east of the Subject. This index registered sold on

February 10, 2015, for a total consideration of $47,050,000 representing a buildable rate per square foot of

$100. The property was improved with a five storey office building.

No application had been submitted to the City of Toronto Planning Department as of the date of this sale,

however, we have estimated, based on development densities in the area, that a development of approximately

470,000 square feet would be possible.

The development proposed for this index of 470,000 square feet is similar to the Subject development of

409,774, requiring no adjustment for size. At the time of sale, the property was similar in terms of

improvements, thus requiring no adjustment for demolition costs.

This Index is considered to be similar in terms of location characteristics given that it is situated just east of the

Subject. In this regard, no adjustment has been applied. This index is configured in a superior fashion to the

Subject. In this regard, a downward adjustment has been applied. This index was not the object of a

development application as of the date of sale, which is felt to be inferior to the Subject, requiring an upward

adjustment.

The index registered sold on February 10, 2015, since which time it is felt that demand for

residential development parcels has remained stable, requiring no adjustment. Overall, it is



felt that the Subject would reasonably command a unit rate generally in line with the $100

per square foot of GFA, as estimated for this index.

Index 4 – 40 Wellesley Street East, Toronto: This index pertains to the sale of a high density residential

development site situated on the north side of Wellesley Street, east of Yonge Street. This index registered sold

on November 3, 2014, for a total consideration of $19,270,000 representing a buildable rate per square foot of

$78. The site was improved with a four storey office building.

An Official Plan Amendment and Rezoning Application (No. 05 212275 STE 27 OZ) was submitted on

December 28, 2005 pertaining to the land in this transaction. The subsequently revised Application proposed

the development of a 37 storey, 265 unit residential condominium development with retail at grade. The

development would have a total gross floor area of approximately 248,380 square feet, including approximately

6,232 square feet of retail space and would have 109 parking spaces on 4 levels of underground parking.

The development proposed for this index of 248,380 square feet is smaller than the Subject development of



demolition costs.

This index is considered to be in an inferior location to the Subject, given it is situated further north and is

further removed from desirable amenities. In this regard, an upward adjustment has been applied. This index is

configured in a comparable fashion to the Subject. In this regard, no adjustment has been applied. This index

was the object of a development application, which is felt to be similar to the Subject, requiring no adjustment.

The index registered sold on November 3, 2014, since which time it is felt the market has improved, requiring

an upward adjustment. Overall, it is felt that the Subject would reasonably command a unit rate higher than the

$78 per square foot of GFA, as indicated by this index.

Index 5 – 56-65 Ontario Street, Toronto: This index pertains to a land assembly situated south of Richmond

Street, west of Parliament Street. This index registered sold on July 31, 2014, for a total consideration of

$16,915,000 representing a buildable rate per square foot of $84. The property was improved with a fours

storey office building.

A Rezoning Application (No. 15 113777 STE 28 OZ) was submitted on February 9, 2015 pertaining to the land in

this transaction and adjacent parcels. The Application proposed the development of a 25 storey, 277 unit

residential condominium development with retail at grade. The existing building at 102 Berkeley Street would



remain as is and is not part of the development. The development would have a total gross

floor area of approximately 200,220 square feet, including approximately 6,674 square feet of retail space and

would have 176 parking spaces and 282 bicycle spaces.




demolition costs.

This index is considered to be in an inferior location to the Subject, given it is further removed from desirable

amenities. In this regard, an upward adjustment has been applied. This index is configured in a comparable

fashion to the Subject. In this regard, no adjustment has been applied. This index was the object of a

development application, which is felt to be similar to the Subject, requiring no adjustment.

The index registered sold on July 31, 2014, since which time it is felt that demand for mixed-use development

parcels has improved, requiring an upward adjustment. Finally, a downward adjustment is required to account

for the purchaser’s extra motivation to complete the property assembly. Overall, it is felt that the Subject would

reasonably command a unit rate higher than the $84 per square foot of GFA, as indicated by this index.



The key comparable sales transacted between July 2014 and February 2015 for rates

between $78 and $117 per square foot of estimated gross buildable area with an average rate of $96. The

Subject features a strong location in proximity to downtown Toronto and convenient access to the amenities

and transit options located along Adelaide Street West.

Although all the indices provide good comparisons of buildable rates for improved development sites in

Downtown Toronto, Index 3 is the felt to be the best comparable given its close proximity to the Subject, similar

improvements, and development potential. Overall due to the location, development timeline and size of the

Subject, it is our opinion that the Subject would achieve a rate at the high end of the range indicated by the

market comparables. A narrowed range of $95 to $105 per square foot is could be reasonably be achieved.

Given the Subject Property is a well located development site which is proposed for developed with a Gross

Floor Area of 409,774 square feet, it is felt that a rate in the middle of the narrowed range would be

appropriate. We have utilized a rate of $100.00, which is reflective of the Subject property development

timeline, and location.

Based upon the foregoing, it is our opinion that the market value of the subject land by the Direct Comparison

Approach, as at April 15, 2015 is:

409,774 square feet buildable @ $100.00 = $41,000,000(Rounded)


$41,000,000



Appendices

Appendix A Contingent and Limiting Conditions






APPENDIX A

CONTINGENT AND LIMITING CONDITIONS



Contingent and Limiting Conditions

1. This report has been prepared at the request of John Neilas of Neilas Inc. for the purpose of providing

an estimate of the market value of 263 Adelaide Street West, Toronto, Ontario, for internal

purposes. It is not reasonable for any person other than the person or those to whom this report is

addressed to rely upon this appraisal without first obtaining written authorization from John Neilas of

Neilas Inc., and the author of this report. This report has been prepared on the assumption that no

other person will rely on it for any other purpose and all liability to all such persons is denied.

2. The estimated market value of the real estate, which is the object of this appraisal, pertains to the value

of the fee simple interest in the real property. The property rights appraised herein exclude mineral

rights, if any.

3. The concept of market value presumes reasonable exposure. The exposure period is the estimated

length of time the asset being valued would have been offered on the market prior to the hypothetical

consummation of a sale at market value on the effective date of valuation. The overall concept of

reasonable exposure encompasses not only adequate, sufficient and reasonable time but also adequate,

sufficient and reasonable effort. The reasonable exposure period is a function not only of time and

effort, but will depend on the type of asset being valued, the state of the market at the date of valuation

and the level at which the asset is priced. (The estimated length of the exposure period needed to

achieve the estimated market value is set forth in the Letter of Transmittal, prefacing this report).

4. The estimate of value contained in this report is founded upon a thorough and diligent examination and

analysis of information gathered and obtained from numerous sources. Certain information has been

accepted at face value, especially if there was no reason to doubt its accuracy. Other empirical data

required interpretative analysis pursuant to the objective of this appraisal. Certain inquiries were

outside the scope of this mandate. For these reasons, the analyses, opinions and conclusions contained

in this report are subject to the following Contingent and Limiting conditions.

5. The property has been valued on the basis that title to the real estate herein appraised is good and

marketable.

6. The author of this report is not qualified to comment on environmental issues that may affect the market

value of the property appraised, including but not limited to pollution or contamination of land, buildings,

water, groundwater or air. Unless expressly stated, the property is assumed to be free and clear of

pollutants and contaminants, including but not limited to moulds or mildews or the conditions that might

give rise to either, and in compliance with all regulatory environmental requirements, government, or

otherwise, and free of any environmental condition, past, present or future, that might affect the market

value of the property appraised. If the party relying on this report requires information about

environmental issues then that party is cautioned to retain an expert qualified in such issues. We



expressly deny any legal liability relating to the effect of environmental issues on the

market value of the property appraised.

7. The legal description of the property and the area of the site were obtained from the Ontario Land

Registry. Further, any plans or sketches contained in this report are included solely to aid the recipient

in visualizing the location of the property, the configuration and boundaries of the site and the relative

position of the improvements on the said lands.

8. The property has been valued on the basis that the real estate is free and clear of all value influencing

encumbrances, encroachments, restrictions or covenants except as may be noted in this report and that

there are no pledges, charges, liens or special assessments outstanding against the property other than

as stated and described herein.

9. The property has been valued on the basis that there are no outstanding liabilities except as expressly

noted herein, pursuant to any agreement with a municipal or other government authority, pursuant to

any contract or agreement pertaining to the ownership and operation of the real estate or pursuant to

any lease or agreement to lease, which may affect the stated value or saleability of the subject property

or any portion thereof.

10. The interpretation of the leases and other contractual agreements, pertaining to the operation and

ownership of the property, as expressed herein, is solely the opinion of the author and should not be

construed as a legal interpretation. Further, the summaries of these contractual agreements are

presented for the sole purpose of giving the reader an overview of the salient facts thereof.

11. The property has been valued on the basis that the real estate complies in all material respects with any

restrictive covenants affecting the site and has been built and is occupied and being operated, in all

material respects, in full compliance with all requirements of law, including all zoning, land use

classification, building, planning, fire and health by-laws, rules, regulations, orders and codes of all

federal, provincial, regional and municipal governmental authorities having jurisdiction with respect

thereto. (It is recognized there may be work orders or other notices of violation of law outstanding with

respect to the real estate and that there may be certain requirements of law preventing occupancy of

the real estate as described in this report. However, such circumstances have not been accounted for in

the appraisal process).

12. Investigations have been undertaken in respect of matters regulating the use of the land. However, no

inquiries have been placed with the fire department, the building inspector, the health department or any

other government regulatory agency, unless such investigations are expressly represented to have been

made in this report. The subject property must comply with such regulations and, if it does not comply,

its non-compliance may affect the market value of this property. To be certain of such compliance,

further investigations may be necessary.



13. The property has been valued on the basis that there is no action, suit, proceeding or investigation

pending or threatened against the real estate or affecting the titular owners of the property, at law or in

equity or before or by any federal, provincial or municipal department, commission, board, bureau,

agency or instrumentality which may adversely influence the value of the real estate herein appraised.

14. The data and statistical information contained herein were gathered from reliable sources and are

believed to be correct. However, these data are not guaranteed for accuracy, even though every

attempt has been made to verify the authenticity of this information as much as possible.

15. The estimated market value of the property does not necessarily represent the value of the underlying

shares, if the asset is so held, as the value of the share could be affected by other considerations.

Further, the estimated market value does not include consideration of any extraordinary financing, rental

or income guarantees, special tax considerations or any other atypical benefits which may influence the

ordinary market value of the property, unless the effects of such special conditions, and the extent of

any special value that may arise therefrom, have been described and measured in this report.

16. Should title to the real estate presently be held (or changed to a holding) by a partnership, in a joint

venture, through a Co-tenancy arrangement or by any other form of divisional ownership, the value of

any fractional interest associated therewith may be more or less than the percentage of ownership

appearing in the contractual agreement pertaining to the structure of such divisional ownership. For the

purposes of our valuation, we have not made any adjustment for the value of a fractional interest.

17. In the event of syndication, the aggregate value of the limited partnership interests may be greater than

the value of the freehold or fee simple interest in the real estate, by reason of the possible contributory

value of non-realty interests or benefits such as provision for tax shelter, potential for capital

appreciation, special investment privileges, particular occupancy and income guarantees, special

financing or extraordinary agreements for management services.

18. Unless otherwise noted, the estimated market value of the property referred to herein is predicated

upon the condition that it would be sold on a cash basis to the vendor subject to any contractual

agreements and encumbrances as noted in this report as-is and where-is, without any contingent

agreements or caveats. Other financial arrangements, good or cumbersome, may affect the price at

which this property might sell in the open market.

19. Should the author of this report be required to give testimony or appear in court or at any

administrative proceeding relating to this appraisal, prior arrangements shall be made beforehand,

including provisions for additional compensation to permit adequate time for preparation and for any

appearances which may be required. However, neither this nor any other of these assumptions and

limiting conditions is an attempt to limit the use that might be made of this report should it properly

become evidence in a judicial proceeding. In such a case, it is acknowledged that it is the judicial body,



which will decide the use of this report which best serves the administration of justice.

20. Because market conditions, including economic, social and political factors, change rapidly and, on

occasion, without notice or warning, the estimate of market value expressed herein, as of the effective

date of this appraisal, cannot necessarily be relied upon as of any other date without subsequent advice

of the author of this report.

21. The value expressed herein is in Canadian dollars.

22. This report is only valid if it bears the original signature(s) of the author(s).

23. These Contingent and Limiting Conditions shall be read with all changes in number and gender as may

be appropriate or required by the context or by the particulars of this mandate.



APPENDIX B

DEFINITIONS



Definitions

Property Interests

Fee Simple

Absolute ownership unencumbered by any other interest or estate subject only to the four powers of

government.

Leased Fee Estate

An ownership interest held by a landlord with the right of use and occupancy conveyed by lease to others; the

rights of lessor or the leased fee owner and leased fee are specified by contract terms contained within the

lease.

Leasehold Estate

The right to use and occupy real estate for a stated term and under certain conditions; conveyed by a lease.

General Definitions

Adjusted or Stabilized Overall Capitalization Rate is usually derived from transactions with excessive

vacancy levels or contract rents over/under market levels. In such cases, net operating income is “normalized”

to market levels and the price adjusted to reflect expected costs required to achieve the projected net operating

income.

The Cost Approach to value is based upon the economic principle of substitution, which holds that the value of

a property should not be more than the amount by which one can obtain, by purchase of a site and construction

of a building without undue delay, a property of equal desirability and utility.

Direct or Overall Capitalization refers to the process of converting a single year’s income with a rate or factor

into an indication of value.

The Direct Comparison Approach examines the cost of acquiring equally desirable and valuable substitute

properties, indicated by transactions of comparable properties, within the market area. The characteristics of



the sale properties are compared to the subject property on the basis of time and such features as location, size

and quality of improvements, design features and income generating potential of the property.

Discount Rate is a yield rate used to convert future payments or receipts into a present value.

Discounted Cash Flow Analysis offers an opportunity to account for the anticipated growth or decline in

income over the term of a prescribed holding period. More particularly, the value of the property is equivalent

to the discounted value of future benefits. These benefits represent the annual cash flows (positive or negative)

over a given period of time, plus the net proceeds from the hypothetical sale at the end of the investment

horizon.

Two rates must be selected for an application of the DCF process:

The internal rate of return or discount rate used to discount the projected receivables;

An overall capitalization rate used in estimating reversionary value of the asset.

The selection of the discount rate or the internal rate of return is based on comparing the subject to other real

estate opportunities as well as other forms of investments. Some of the more common benchmarks in the

selection of the discount rate are the current yields on long-term bonds and mortgage interest rates.

Exposure Time is the property's estimated marketing time prior to a hypothetical sale at market value on the

effective date of the appraisal. Reasonable exposure time is a necessary element of a market value definition

but is not a prediction of a specific date of sale.

Highest and Best Use - The purpose of a highest and best use analysis is to provide a basis for valuing real

property. Highest and best use is defined by the Appraisal Institute of Canada as:

“that use which is most likely to produce the greatest net return over a period of time.” The

highest and best use must be legally permissible, physically possible, financially feasible and

maximally productive.

The Income Approach to value is utilized to estimate real estate value of income-producing or investment

properties.

Internal Rate of Return is the yield rate that is earned or expected over the period of ownership. It applies to

all expected benefits including the proceeds of sale at the end of the holding period. The IRR

is the Rate of Discount that makes the net present value of an investment equal zero.



Market Value - The Uniform Standards of Professional Appraisal Practice adopted by the Appraisal Institute of

Canada define market value as:

"The most probable price which a property should bring in a competitive and open market under

all conditions requisite to a fair sale, the buyer and seller each acting prudently and

knowledgeably, and assuming the price is not affected by undue stimulus."

Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller

to buyer under conditions whereby:

Buyer and seller are typically motivated;

Both parties are well informed or well advised and acting in their own best interests;

A reasonable time is allowed for exposure in the market; and

Payment is made in cash in Canadian dollars or in terms of financial arrangements comparable thereto.

The price represents the normal consideration for the property sold, unaffected by special or creative financing

or sales concessions granted by anyone associated with the sale.

Net Operating Income is the actual or anticipated net income remaining after all operating expenses are

deducted from effective gross income before debt service and depreciation. Net Operating Income is usually

calculated for the current fiscal year or the forthcoming year.

Overall Capitalization Rate is an income rate that reflects the relationship between a single year’s net

operating income expectancy and the total property price. The Overall Capitalization Rate converts net

operating income into an indication of a property’s overall value.

Reasonable Exposure Time - Exposure time is always presumed to precede the effective date of the appraisal.

It may be defined as:

"The estimated length of time the property interest being appraised would have been offered on

the market prior to the hypothetical consummation of a sale at market value on the effective date

of the appraisal. It is a retrospective estimate based upon an analysis of past events assuming a

competitive and open market."

A Yield Rate is applied to a series of individual incomes to obtain a present value of each.



APPENDIX C

COMPARABLE SALES



Index No. 1Blue Jays Way, Toronto, Ontario

Property Description Location / Legal / Land Use

Property Type Land Address Blue jays WayProperty Sub-Type Residential Municipality TorontoSite Area 0.96 A Province OntarioTopography LevelAccess/Exposure Very Good Legal Part of Back Road (Closed by By-law 539-2014) on the

North Side of Mercer Street, Plan 57, designated as Part 1

on Reference Plan 66R-26134, City of Toronto

Servicing ServicedSite Improvements Improved

Transaction Details

Sale Price $78,800,017 (100% Equivalent)Interest Transferred 100 %Sale Price per BSF $109Status ClosedDate 07-Aug-14Vendor Ed Mirvish Enterprises Limited

Purchaser Easton Group of Companies and Remington

Group

Document No. n/aRights Conveyed Fee SimpleComments

A Site Plan Application (No. 13 128023 STE 20 SA) was submitted on March 4, 2013 pertaining to the land in this transaction and adjacent parcels. The Application proposed the

development of two mixed use towers of 44 and 48 storeys containing 1,035 units, which includes 122 proposed hotel units in the north tower podium. The development would have a

total gross floor area of 724,148 square feet, including approximately 9,042 square feet of retail space, and would incorporate non-profit office space, a pedestrian pathway, museum,

and hotel in 135,282 square feet of commercial space. The development would have 443 parking spaces.



Index No. 2367-369 King Street West, Toronto, Ontario


Property Type Land Address 367-369 King Street WestProperty Sub-Type Residential Municipality TorontoSite Area 0.108 A Province OntarioTopography Level

Access/Exposure Good Legal 21413-0060: Part of Lots 5 & 6 on

Plan D263, designated as Part 1 on

Plan 64R-3978

21413-0061: Part of Lots 4 & 5 on


Plan 64R-15903


Transaction Details

Sale Price $7,500,000 (100% Equivalent)Interest Transferred 100 %Sale Price per BSF $117

Status ClosedDate 15-Jan-15Vendor TAS Designbuild and Lifetime

DevelopmentsPurchaser Main and Main Developments Inc.Document No. n/aRights Conveyed Fee SimpleComments

A Rezoning Application (No. 12 272708 STE 20 OZ) and A Site Plan Application (No. 12 272712 STE 20 SA) were submitted on November 2, 2012 pertaining to the land in this

transaction. The Applications proposed the development of a 15 storey, 62 unit residential condominium development with retail at grade. The development would have a total gross

floor area of approximately 64,357 square feet, including approximately 10,170 square feet of retail space and would have 0 parking spaces and 69 bicycle spaces.



Index No. 319 Duncan Street, Toronto, Ontario


Property Type Land Address 19 Duncan StreetProperty Sub-Type Residential Municipality TorontoSite Area 0.59 A Province OntarioTopography LevelAccess/Exposure Very Good Legal Part of Block C on Plan 223E, as described in

Instrument No. ES61173


Transaction Details

Sale Price $47,050,000 (100% Equivalent)Interest Transferred 100 %Sale Price per BSF $100Status ClosedDate 10-Feb-15Vendor An individual(s) acting in his/her ownPurchaser Allied Properties REIT and WestbankDocument No. n/aRights Conveyed Fee SimpleComments

No application had been submitted to the City of Toronto Planning Department as of the date of this sale, however, we have estimated, based on development densities in the area, that

a development of approximately 470,000 square feet would be possible.



Index No. 440 Wellesley Street East, Toronto, Ontario


Property Type Land Address 40 Wellesley Street EastProperty Sub-Type Residential Municipality TorontoSite Area 0.33 A Province OntarioTopography LevelAccess/Exposure Good Legal Part of Park Lot 8, Concession 1, From the Bay,

Township of York, designated as Part 1 on Plan

63R-3412


Transaction DetailsSale Price $19,270,000 (100% Equivalent)Interest Transferred 100 %Sale Price per BSF $78Status ClosedDate 3-Nov-14Vendor 862015 Ontario Inc.

Purchaser Cresford DevelopmentsDocument No. n/aRights Conveyed Fee SimpleComments

An Official Plan Amendment and Rezoning Application (No. 05 212275 STE 27 OZ) was submitted on December 28, 2005 pertaining to the land in this transaction. The subsequently

revised Application proposed the development of a 37 storey, 265 unit residential condominium development with retail at grade. The development would have a total gross floor area

of approximately 248,380 square feet, including approximately 6,232 square feet of retail space and would have 109 parking spaces on 4 levels of underground parking.



Index No. 553-65 Ontario Street, Toronto, Ontario


Property Type Land Address 53-65 Ontario StreetProperty Sub-Type Residential Municipality TorontoSite Area 0.35 A Province OntarioTopography LevelAccess/Exposure Very Good Legal 21091-0010: Parcel 10-5, Section A7A, Part of Lot 10, Plan

7A, Toronto, designated as Part 4 on Plan 66R-17669

1091-0011:


Transaction Details

Sale Price $16,915,000 (100% Equivalent)Interest Transferred 100 %Sale Price per BSF $84Status ClosedDate 31-Jul-14Vendor Double D-Cup Inc.

Purchaser Lamb Development Corp.Document No. n/aRights Conveyed Fee SimpleComments

A Rezoning Application (No. 15 113777 STE 28 OZ) was submitted on February 9, 2015 pertaining to the land in this transaction and adjacent parcels. The Application proposed the development

of a 25 storey, 277 unit residential condominium development with retail at grade. The existing building at 102 Berkeley Street would remain as is and is not part of the development. The

development would have a total gross floor area of approximately 200,220 square feet, including approximately 6,674 square feet of retail space and would have 176 parking spaces and 282

bicycle spaces.



APPENDIX D

CERTIFICATION



Certification

RE: 263 ADELAIDE STREET WEST, TORONTO, ONTARIO.

I certify that, to the best of my knowledge and belief:

The statements of fact contained in this report are true and correct.

The reported analyses, opinions and conclusions are limited only by the reported assumptions and limiting conditions,

and are my personal, unbiased professional analyses, opinions and conclusions.

I have no present or prospective interest in the property that is the subject of this report, and I have no personal

interest or bias with respect to the parties involved.

I have no bias with respect to the property that is the subject of this report.

My compensation is not contingent upon the reporting of a predetermined value or direction in value that favours the

cause of the client, the amount of the value estimate, the attainment of a stipulated result, or the occurrence of a

subsequent event.

My analyses, opinions and conclusions were developed, and this report has been prepared, in conformity with the

Canadian Uniform Standards of Professional Appraisal Practice and with the requirements of the Code of Professional

Ethics and Standards of Professional Practice of the Appraisal Institute of Canada (A.I.C.).

Matthew Bruchkowsky conducted an exterior inspection of the Subject property on April 15, 2015.

I have the knowledge and experience to complete the assignment competently.

The Appraisal Institute of Canada has a Mandatory Recertification Program for designated members. As of the date of

this report, Matthew Bruchkowsky has fulfilled the requirements of the program.

The value estimate contained in this report applies as at the effective date of valuation as defined within the body of this

report.

Final Estimate of ValueBased on our analysis, the market value of the Fee Simple Interest in the Subject Property, subject to the underlying contingent and

limiting conditions outlined herein as at April 15, 2015, based on an exposure time of one to three months, the market value of the

property is:


$41,000,000

COLLEIRS INTERNATIONAL REALTY ADVISORS INC.


Senior Director


MBEO (01/12):7600524 Coverage Wording page 1 of 15

MORTGAGE BROKERS ERRORS AND OMISSIONS LIABILITY POLICY

THIS POLICY IS A CLAIMS MADE AND REPORTED POLICY. EXCEPT AS OTHERWISE PROVIDED HEREIN, THIS POLICY COVERS ONLY CLAIMS FIRST MADE AGAINST THE INSUREDS AND REPORTED TO THE INSURER DURING THE POLICY PERIOD OR ANY APPLICABLE EXTENDED REPORTING PERIOD. THE LIMIT OF LIABILITY AVAILABLE TO PAY FOR JUDGMENTS OR SETTLEMENTS SHALL NOT BE REDUCED BY AMOUNTS INCURRED FOR CLAIMS EXPENSES. _____________________________________________________________________________________

DECLARATIONS Policy Number: 7600524

Item 1. Named Insured: Hi-Rise Capital Ltd. Named Insured’s Address: 401 – 200 Adelaide Street West, Toronto, Ontario, M5H 1W7

Item 2. Policy Period: From: January 1, 2015 To: January 1, 2016 Both dates at 12:01 a.m. at standard time at the Named Insured’s Address

Item 3. Limits of Liability: $2,500,000 each claim $5,000,000 policy aggregate

Item 4. Deductible: $100,000 each claim Item 5. Premium: $28,100

Minimum Retained Premium: Non-applicable Item 6. Retroactive Date: Non-applicable

Item 7. Endorsements: 1, 2, 3

These Declarations, the attached policy terms, the endorsements referred to in Item 7. above and the applicable application constitute the entire policy. In witness whereof, the Insurer has caused this policy to be countersigned by a duly authorized representative of the Insurer.

ROYAL & SUN ALLIANCE

INSURANCE COMPANY OF CANADA

January 2, 2015 ___ Date: Authorized Representative

APPENDIX E Adelaide Lofts

ADDITIONAL DOCUMENTS

APPENDIX “E”

The following documents will be delivered to the investor within ten days of execution of the investor documents and registration of your investment. The documents will be sent in the form of a closing book with excerpts only from relevant reports.

SECONDARY DOCUMENTS

1. Consultant Reports A. Appraisal Report B. Phase I Environmental Site C. Boundary and Topographical Survey D. Planning Rationale Report E. Heritage Impact Assessment F. Traffic Impact Study G. Parking Justification Study H. Functional Servicing & Stormwater Management Report I. Stage 1 Archeological Resource Assessment J. Preliminary Structural Wind Load Review

Pedestrian Level Wind Study K. Tree Inventory and Preservation Plan L. Development Approval Application

2. KingSett Mortgage Corporation (First Mortgage) 3. Hi-Rise Capital Ltd. (Second Mortgage)

EXHIBIT “B”

APPENDIX D

Adelaide Lofts

APPENDIX “D”


Section 3 Part E. Form 1 – Investor/Lender Disclosure Statement for Brokered Transaction list documents that may or may not be related to this investment. Enclosed in Appendix “D” are documents related to Part E. of Form 1.

1) Copy of the Mortgage Charge and Commitment

2a) Not applicable

2b) Colliers International Realty Advisors Inc. Property Appraisal as of April 15, 2015

3) Not applicable

4a) Borrower’s Equifax Business Credit Report

4b) Not applicable

5) Not applicable

6) Mortgage Participation Agreement & Loan Participation Agreement

7) Form 1.1 Investor/Lender Disclosure Statement

In addition to the standard Investment Documents Hi-Rise Capital has enclosed the following documents as part of its disclosure to investors for review.

8) Adelaide Re-zoning Application Amendment

9) Errors and Omissions Insurance Liability Policy

10) Borrower’s Certificate of Incorporation

Narrative Appraisal263 Adelaide Street West

Toronto, OntarioApril 2015

PREPARED BY:Matthew Bruchkowsky, AACI, P. App.

Senior DirectorValuation & Advisory Services

PREPARED FOR:John NeilasNeilas Inc.

Colliers International Realty Advisors Inc. One Queen Street East Suite 2200 Toronto, Ontario M5C 2Z2 www.colliers.com

MAIN +1 416 777 2200 FAX +1 416 643 3470

May 4, 2015

Hi-Rise Capital Ltd.

200 Adelaide Street West, Suite 401

Toronto, Ontario, M5H 1W7

Canadian Western Trust

606 4th Street SW, Suite 310

Calgary, Alberta, T2P 1T1

To whom it may concern,

RE: FULL NARRATIVE APPRAISAL OF DEVELOPMENT SITE LOCATED AT 263 ADELAIDE STREET WEST,

TORONTO, ONTARIO

Colliers International Realty Advisors Inc. prepared a Full Narrative Appraisal Report of the property referenced above,

retained in our files as Colliers File No. TOR-15-286 on April 20, 2015. The effective date of the appraisal was April 15, 2015.

Within our report, which is assumed to be in your possession, we concluded that the market value as of the effective date,

was as follows:


$41,000,000

We confirm that the report was originally completed at the request of John Neilas of Neilas Inc., who has authorized us to

provide this letter permitting your use of the referenced report for financing purposes. We further confirm that had the report

with the same scope of work been completed directly on behalf of Hi-Rise Capital Ltd. or Canadian Western Trust, the

results would not have differed. This letter confirms that Hi-Rise Capital Ltd. and Canadian Western Trust may rely upon the

conclusions set out in the above-referenced report as a factor in determining whether or not to provide financing with the

(property) provided as collateral.

Please be advised that the value estimate expressed was as of April 15, 2015

financial position, as well as the prevailing market conditions, may have changed between the effective date and the date of

this letter.

Respectfully,

Colliers International Realty Advisors Inc.


Senior Director, Toronto



Table of ContentsExecutive Summary ........................................................................ i

Terms of Reference ........................................................................ 1

Property Data................................................................................. 4Municipal Address ..................................................................................................................................4

Legal Description....................................................................................................................................4

Ownership and History...........................................................................................................................4

Site Description ......................................................................................................................................5

Land Use/Planning .................................................................................................................................6

Location Description...............................................................................................................................9

Market Overview........................................................................... 12March 2015 Canadian Economic Overview......................................................................................... 12

March 2015 Ontario Economic Overview............................................................................................ 16

March 2015 Toronto Economic Overview ........................................................................................... 19

Residential Condominium Sub-Market Overview ................................................................................22

Valuation ...................................................................................... 25Highest and Best Use...........................................................................................................................25

Direct Comparison Approach...............................................................................................................29

Appendices................................................................................... 39Appendix A Contingent and Limiting Conditions





File Reference: TOR-15-286 i

Executive Summary

263 ADELAIDE STREET WEST

TORONTO, ONTARIO

Date of Appraisal April 15, 2015

Property Type Current Use – Mixed use heritage building

Proposed Use – Mixed-use Development

Rights Appraised Fee Simple Interest

Purpose and Function The purpose is to estimate the current market value of the Subject as

a redevelopment site.

The function of the report is to estimate the market value of the

property for internal purposes.

Registered Owner Adelaide Street Lofts Inc.

Legal Description PT BLK B PL 216E TORONTO AS IN ES61538; S/T & T/W ES61538;

CITY OF TORONTO

Assessment Roll Number 1904062280002000000

PIN Numbers 21411-0162

Property Description

The Subject consists of a rectangular shaped site with frontage on the south side of Adelaide Street West, just

east of John Street in Downtown Toronto. At the date of inspection, the Subject was improved with heritage

listed mixed use building.

Site Area 0.35 acres or 15,430 square feet (Source: Client)

Frontage Approximately 129 feet on the south side of Adelaide Street West


Services Full municipal services available.

Land Use Controls

Official Plan Toronto Official Plan, as amended, designates the property as a

Regeneration Area.


File Reference: TOR-15-286 ii

The Subject falls within the King-Spadina North Secondary Plan.

Land Use Classification The zoning by-law designates the Subject as being RA, which permits

residential and commercial uses. The site requires rezoning to permit

the proposed development.

Compliance As presently configured and used, the proposed development

requires a rezoning application to permit the proposed density and

height.

Highest and Best Use Development of the existing land uses for high density mixed use in

compliance with the prevailing land use controls.


Site Area 15,430 square feet or 0.35 acres

Proposed Gross Floor Area 409,774 square feet (Client)

Estimated Land Value 409,774 square feet x $100/sq. ft. buildable = $41,000,000

Final Value Conclusion

Effective Date April 15, 2015

Value Estimate $41,000,000

Exposure Time One to three months


File Reference: TOR-15-286 iii

Regional Map

Location Map


File Reference: TOR-15-286 iv

Photographs of Subject Property

VIEW OF THE SUBJECT PROPERTY VIEW OF THE SUBJECT PROPERTY

VIEW EAST ALONG ADELAIDE STREET WEST VIEW WEST ALONG ADELAIDE STREET WEST



Terms of ReferencePurpose and Function of Report

The purpose is to estimate the Subject’s current market value as a redevelopment site. The function is for

internal purposes. John Neilas of Neilas Inc. has requested this report. This report has been prepared only for

the party named above and only the specific use stated.

Property RightsThe property rights appraised are those of Fee Simple Interest.

Effective DateThe effective date of this valuation is April 15, 2015.

Inspection DateMatthew Bruchkowsky, AACI conducted an exterior inspection of the Subject property on April 15, 2015.

Market Value DefinitionFor the purposes of this valuation, market value is defined as:

"The most probable price which a property should bring in a competitive and open market under all

conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and

assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a

sale as of the specific date and the passing of title from seller to buyer under conditions whereby:

1. Buyer and seller are typically motivated;

2. Both parties are well informed or well advised, and acting in what they consider to be in

their best interests;

3. A reasonable time is allowed for exposure in the open market;

4. Payment is made in terms of cash in Canadian Dollars or in financial arrangements

comparable thereto; and

5. The price represents the normal consideration for the property sold unaffected by

special or creative financing or sales concessions granted by anyone associated with the

sale.”

(Source: The Appraisal Institute of Canada "Canadian Uniform Standards of Professional Appraisal Practice". 2012.



Exposure TimeAn estimate of market value is related to the concept of reasonable exposure time. Exposure time is the

property's estimated marketing time prior to a hypothetical sale at market value on the effective date of the

appraisal. Reasonable exposure time is a necessary element of a market value definition but is not a prediction

of a specific date of sale.

Exposure time is also a product of the function of the real property in question. The Subject is a downtown

redevelopment site that is proposed for development with a high density mixed-use building. The downtown

market is easily accessed from the Subject via public transit operated by the TTC and there are significant

amenities in the area available to prospective residents.

Ongoing discussions with agents active within the real estate market have indicated that properties such as the

Subject typically require a marketing period of one to three months, depending on a number of factors including

location, condition and motivation of the purchaser/vendor. Therefore, it is concluded that for the Subject

property to sell at the market value estimated herein as of the effective date of this report, an exposure period

of approximately one to three months would be required.

Scope of the ValuationThis is a Narrative Appraisal Report and complies with the reporting requirements set forth under the

Canadian Uniform Standards of the Appraisal Institute of Canada. As such, all relevant material is provided in

this report including the discussion of appropriate data, reasoning, and analyses that were used in the appraisal

process to develop the appraiser’s opinion of value. Additional supporting documentation concerning the data,

reasoning, and analyses are retained in the appraiser’s file. The depth of discussion contained in this report is

specific to the needs of the client and for the intended use stated herein.

Market information reviewed is available from publicly available sources including economic reports, Statistics

Canada, the municipal economic development office, etc.

Market information was obtained from Colliers Research, commercially available information databases

(RealNet, Geowarehouse and Marsh Report) and local real estate professionals knowledgeable about the local

market.

During the course of preparing this valuation, the following was completed:

An inspection of the property and the surrounding area.

A review of available data regarding the local market.



Verification of current land use and zoning regulations via discussions with the City of Toronto planning

department.

Review of the proposed development material provided by Neilas Inc.

A review of sales and listing data on comparable properties.

An examination of market conditions and analysis of their potential effects on the property.

A review of the local competitive market.

Interviews with market participants.

An analysis of the highest and best use of the property.

Contingent and Limiting ConditionsThis report is subject to the Contingent and Limiting Conditions set forth within the Addenda to this appraisal in

addition to any specific assumptions that may be stated in the body of the report. These conditions are critical to

the value stated herein and should be thoroughly read and understood before any reliance on this report

is considered.

Extraordinary AssumptionsAn Extraordinary Assumption is an assumption, which if not true, could alter the appraiser’s opinions and

conclusions. They are required when a Hypothetical Condition is necessary due to circumstances that are not

self-evident regarding the appraised property. Hypothetical Conditions include retrospective appraisals,

significant renovations to the improvements, completion of proposed improvements, etc.

It is an Extraordinary Assumption of this report that the Subject can be rezoned to permit a 409,774 square feet

development.

Extraordinary Limiting ConditionsAn Extraordinary Limiting Condition refers to a necessary modification or exclusion of an Appraisal Institute

Standard Rule. Such special circumstances include the inability to complete a property inspection, the

purposeful exclusion of a relevant valuation technique, etc.

No Extraordinary Limiting Conditions were invoked within this report.



Property DataMunicipal Address


Legal Description

PT BLK B PL 216E TORONTO AS IN ES61538; S/T & T/W ES61538; CITY OF TORONTO

Ownership and History

Current OwnershipThe Subject last transferred on June 24, 2011 for a consideration of $16,500,000 in what is believed to be an

arm’s length transaction. The property is currently registered to Adelaide Street Lofts Inc.

Current ContractsAs of the effective date, the Subject site is not the object of an agreement of purchase and sale.

EncumbrancesWe are not aware of any easements or rights of way that adversely affect the market value of the Subject

property. For greater certainty a legal opinion should be solicited for a full explanation of the effects of these

encumbrances. Additionally, the property has been valued as if it were free and clear of any financing.

Assessment and Realty Tax DataRoll No. 1904062280002000000

2015 Phased-In Assessment $17,452,000

Total per SF of land $1,131

It is reasonably expected that upon development the Subject will be reassessed and taxed accordingly.



Site Description

Area 0.35 acres or 15,340 square feet (Source: Client)

Frontage Approximately 129 feet onto the south side of Adelaide Street West.


Topography The site appears to be at grade with the surrounding properties.

Services Full municipal services available at street frontage.

Access The Subject is accessed via Adelaide Street West.

Title Instruments For the purposes of this analysis, the instruments registered against the

title(s) to the property are assumed not to have a significant effect on the

property’s marketability or its market value. For greater certainty a legal

opinion should be solicited for a full explanation of the effects of any

existing encumbrances.

For the purposes of this analysis, we assume the title is marketable

without any encumbrances.

Soil Conditions We have not undertaken a detailed soil analysis, and as we are not

qualified to comment on soil conditions, we have assumed that there are

no contaminants affecting the site. However, a full environmental

assessment would be required for certainty and any cost of remedy should

be deducted from the reported value herein. The sub-soil is assumed to

be similar to other lands in the area and suitable in drainage qualities and

load bearing capacity to support future development.

Conclusion The Subject is well located within an area of Toronto that has experienced

a significant increase in density over the last few years. The surrounding

land uses have transitioned from low density commercial uses to high

density residential and mixed uses. In addition, the Subject is in downtown

Toronto with its associated amenities, which are easily accessed via bus

and streetcar service, operated by the TTC.



Site Survey



Land Use/Planning

Official Plan Map

Regeneration Areas are key to the Plan’s growth strategy, reintegrating areas of the City that are no longer in

productive urban use due to shifts in the local or global economies. In Regeneration Areas, commercial,

residential, live/work, institutional and light industrial uses can be mixed within the same block or even the

same building.” The intent being to rejuvenate under used areas.

The Subject falls within the King-Spadina Secondary Plan. Key objectives of the secondary plan include:

- Attract new investment to the area

- Provide a mixture of uses which are compatible with the area and can evolve along a similar timeline

as the residential population stabilizes

- Retention and promotion of current commercial and industrial uses which provide for area employment

- Provide commercial activity which supports existing and new residents as well as surrounding

communities

- Retention, restoration, and reuse of heritage buildings

Permitted uses will include a mix of employment and residential, provided that employment uses are restricted

to those compatible with adjacent and neighbouring residential uses in terms of emissions, odour, noise and

generation of traffic.

Zoning

The Subject property is designated as RA under By-law 438-86. Under the current zoning a wide array of uses

including residential, office, retail, and employment uses. The zoning designation does not limit density,

however, it does restrict high to 30 meters.

SUBJECT



A rezoning application had been submitted to the City of Toronto to permit numerous aspects of the proposed

development which do not conform to the in place zoning by-law, most notably its proposed height.

Zoning Map

Heritage

The Subject is currently improved with a five storey build which is listed on the City of Toronto’s Inventory of

Heritage Buildings. The redevelopment proposal would incorporate the street facing façade of the building into

the new development.

Application

A rezoning application was which proposed the redevelopment of the Subject with a 49 storey mixed use

building with a gross floor area of 409,774 square feet. In addition, the new development would be required to

make considerations for the replacement of the rental stock currently in place.

Compliance

Under the current land use controls, the proposed development as described herein would require a rezoning

application. The current application is being review by the City of Toronto Planning Department.



Location Description

The Subject is located in an area which is transitioning from medium commercial and office uses to high

density residential and mixed uses. The Subject’s area of Toronto is known as the Entertainment District, which

has in recent years due to the significant level of development had a large population increase. The Financial

District, just east of the Subject, is readily accessible via public transit in the form of bus and streetcars

operating along Adelaide Street West. The immediate area has seen significant levels of redevelopment in

recent years, both along major arterials and immediately adjacent streets.

Recent development in the area has largely taken the form of high-density residential and mixed-use

developments, which have primarily been located along major arterials, however, due to the rising cost of

redevelopment sites, development has started to move to neighboring streets. The immediate area has in

recent years has been transformed with numerous high density mixed use developments. Currently in close

proximity of the Subject, there are 7 developments proposed for development including a 48 storey

development immediately adjacent to the Subject on the corner of Adelaide Street and John Street.

Surrounding land uses include:

North: The north side of Adelaide Street is lined by low rise commercial

buildings including a City of Toronto fire station. Further north, the

SUBJECT



area is primarily developed with low to mid rise commercial buildings interspersed

with new high density residential and mixed use developments.

South: South of the Subject to Front Street is a mixture of office and commercial buildings

of varying densities. South of Front Street is the entertainment node containing the

Rogers Center and the CN Tower.

East: East of the Subject, Adelaide Street is lined by a number of former industrial builds

which have been repurposed for commercial, office, or residential use. Many of these

buildings, which have heritage status, are the target of redevelopment proposals.

West: Immediately west of the Subject is a development site which is proposed for

development featuring a 48 storey residential tower with ground floor retail space.

Further west, Adelaide Street is lined by medium density commercial buildings and

sites proposed for redevelopment with residential or mixed use towers.

SummaryThe Subject is located in an area which is transitioning from predominantly medium density commercial uses to

high density residential uses with some commercial uses. Despite the significant supply, the demand for

residential condominiums has been stable in response to the rising cost of commuting, traffic congestion and

the high cost of single family dwellings. The outlook for this segment of the market is discussed in greater detail

within the report.



Development DescriptionThe Subject site is proposed for development with a 49-storey mixed use building containing ground floor

commercial/retail space and office space in addition to residential amenity space. The total proposed Gross Floor

Area is 409,774 square feet and would feature bachelor, one bedroom, two bedroom, and three bedroom units.

The street facing façade of the current improvements will be incorporated into the base of the new development.

Parking will consist of both vehicle and bicycle parking contained within an underground parking structure.

Development Rendering



Market OverviewMarch 2015 Canadian Economic OverviewAs a result of the decline in oil prices, the Bank of Canada became the first central bank in the larger Group of

Seven to cut interest rates lowering its target for the overnight rate by one-quarter of one percentage point to ¾

% in the first quarter of 2015. In addition, total CPI is beginning to reflect the change in oil prices and inflation has

remained close to 2.0% in recent quarters. With growing angst about the sluggish pace of job creation, a second

cut was a potential reality this month but the Bank of Canada held the rate steady at 0.75%. Canada’s streak of

unimpressive economic growth is expected to continue into 2015, with forecasts calling for 1.9% overall in 2015,

a substantial downgrade from the September forecast. While the U.S. economy is gaining momentum, the drop in

oil prices will cost producers more than US$40 billion in lost revenue and result in a considerable decline in

business investment.


Economic Indicator

Historical2012-2014


Mid-TermForecast

2016-2019

ForecastTrend

GDP 2.2% 1.9% 2.1%



2.8% 1.4% 4.8%

Personal Income percapita

2.6% 2.8% 2.9%


Retail Sales per capita 2.7% 1.6% 2.6%

CPI 1.4% 1.2% 2.0%

Housing Starts -6.1% -9.3% 4.7%

Forecast RiskThe most glaring risk to Canada’s economic outlook stems from the recent decline in the price of oil and other

commodities. While the most immediate impact will be positive- a boost to consumers’ disposable incomes and

spending, heightened manufacturing based on reducing production costs and increases in forestry and agriculture

– lower oil prices if persistent, will discourage investment and exploration in the oil sector. Lower oil prices are

typically accompanied by a weaker Canadian dollar, which we are already seeing. Over time, higher-cost oil is

still likely to be needed to satisfy growing global demand; however, prices could potentially continue to decrease,

or simply remain low through the first two quarters of 2015 before those medium-term forces really start to

influence the market which could slow growth projections even further.



Real Gross Domestic Product (GDP)

The economy is forecast to expand by just 1.9% in 2015, the fourth

consecutive year of growth below 2.5%. The sharp drop in oil prices will

cost more than US$40 billion in revenue; however, what should help

balance this is the U.S. economy’s momentum which should further

stimulate demand for Canadian exports, especially non-energy related

exports, made more competitive by the lower value of the Canadian dollar.

Employment

With overall economic growth in 2015 expected to be a substantial

downgrade from the September forecast, job growth is expected to

remain fairly tepid. After a dismal gain of 136,000 jobs in 2014, the labour

market is expected to add just 187,000 jobs in 2015.

Unemployment

Business investment will be the weakest part of the Canadian economy in

2015. Capital budgets are already being significantly cut across the oil and

gas industry. With the potential for layoffs very present and a soft

domestic economy, the unemployment rate will remain stuck at

approximately 6.8% this year.


Canadians have received consecutive real wage gains since 2011

averaging 2.9% per annum. Personal income per capita is anticipated to

exceed $42,500 in 2015. By 2019, personal income per capita is forecast

to exceed $47,750 with growth averaging 2.9% from 2016 through 2019.



Population

Canada’s population growth rate has been averaging 0.7% from 2012 to

2014. The country’s population is expected to grow 1.1% in 2015 to 35.8

million. The country’s population growth is forecasted to remain

consistent with 1.1% increases from 2016 through 2019 reaching over

37.5 million by 2019.


Consumer spending will be restrained by soft employment growth,

including the threat of job losses in oil-rich provinces, weak wage gains,

and high levels of household debt and easing real estate markets. While

consumers should get a break on lower gasoline costs and consumer

prices, it won’t be enough to counter the trend of easing growth in

household spending.


Canada’s Consumer Price Index is projected to finish 2015 at 1.2% with

future growth forecasted at 2.1% from 2016 through 2019. This is not

surprising given that CPI has begun to reflect the decline in the price of

oil.

Housing Starts

Residential construction investment is also expected to cool this year. A

combination of declining oil prices and oversupply in some cities’

condominium markets will prompt a 9.3% decline in new home

construction, as housing starts fall from 189,400 units in 2014 to 171,700

units in 2015.

The information is sourced from:

a) The Conference Board of Canada, Metropolitan Outlook 1 Winter 2015, based on August 29, 2014 Canadian economic accounts

b) Statistics Canada